Tag Archives: how to save taxes

Court Explains Offshore Company International Tax Plan

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Tax Court explains great tax planning in this case.

This blog is about “Offshore Company International Tax Plan” approved by the the U.S. Tax Court.   The court’s  blueprint on offshore tax planning with a tax haven corporation will cut your tax burden in half.  

 In this Tax Court case, a private annuity was used to fund the foreign corporation.   The   corporation invested in publically traded stocks. 

A private annuity with a foreign corporation is a popular tax plan for the very rich.

What I like about the case, is that the IRS is the victor.  This means the IRS is not likely to disagree with its court victory

Offshore Company International Tax Plan with a Private Annuity

It works like this.  I form a BVI company with $10,000 as capital.    Then I fund my BVI corporation with an additional $90,000.  However, this time my corporation signs an agreement promising me an annual payment of $8,000 a year for the rest of my life or until I dissolve my corporation.    This arrangement is called a “private annuity.”

My BVI company earns $8,000 a year on its $100,000 (the $10,000 for the capital and the $90,000 for the private annuity).  It also deducts the $8,000 it pays me on the annuity,  leaving the corporation with no taxable income.   However, the annuity income tax rules, section 72, allocates $4,000 a year to my cost.  Of the $8,000 I received on the annuity, only $4,000 is taxable ($8,000 minus my allocated cost of $4,000).

I cast my tax planning is stone by filing IRS Form 5471.  Of course, I reference the IRS Tax Court case victory on the Form 5471. It is in this form that I report the activity of my offshore tax haven corporation.  As you may know, Congress enacted new laws to improve offshore corporations.  Here is a link with the basic.

Listen to our internet radio show, Tax Talk,  below (the show is about 15 minutes) to learn how to save taxes on your investment income with your controlled foreign corporation funded by your private annuity.  The term “private annuity”  means that no insurance company is involved.  Only you and your corporation are involved.  

Too busy to listen now? Ok.. then download the episode from our free Itunes page on this link.


Seemingly innocent but deadly to the IRS, private annuities have saved taxes since the beginning of the 1900’s.   But, now they are better.  The U.S. Tax Court agreed that private annuities paid by a tax haven corporation avoid all of nasty the anti-tax haven laws.

It gets better.  The IRS private  annuity interest rates are at an all-time low (about two percent).  This allows for income shifting to your offshore company.

Something as simple as your controlled foreign corporation funded with your money provides tax savings and asset protection beyond your wildest dreams (tax dreams that is).

The trick?   The trick, as you will learn on our internet radio show, Tax Talk (below), is the IRS’s information return, regulations and a recent Tax Court victory in  Dante and Sandi Perano, Petitioners vs. Commissioner of Internal Revenue.

Need Help with your Offshore Company International Tax Plan

If you need advice for your office company international tax plan, then contact me, Brian Dooley, CPA, MBT, at [email protected]

Small Business Tax Planning with Gift Cards and other types of Private Money

Banknotes can be payable in gold, any currency (such as the Swiss Franc) or product. They have been used for centuries by the wealthy to create wealth.

This morning I was annoyed as a Starbucks patron had his iPhone loaded with pre-paid Starbucks.  Small business tax planning with gift cards and other types of private money has been used by Disney for more than half a century.

I was reminded of last century’s use of private money.  For centuries, banknotes have been used in the UK and Europe as “private money.”  

Now,  innovative taxpayers are using their private money to create wealth and to save taxes.  

The Starbuck’s virtual prepaid card and gift cards are types of private money.  With the correct tax election, you do not pay tax when the card is sold. 

You pay tax when the card is used to pay for your product or services.

If you are like Disney, the tax deferral rollover year after year.   About one third of gift cards and prepaid cards are never used giving you an very long tax deferral. 
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Foreign trust tax planning and asset protection using the IRS blueprint

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Saving taxes by requesting a private letter ruling from the IRS National Office.

The IRS has a new blueprint on foreign trust tax planning and asset protection.  And it is very good!

The IRS issued a legal memorandum providing the blueprint for protecting assets and saving taxes. 

The tax advantage of a foreign trust is its classification as a “grantor trust.”  This tax plan uses a special asset protection section of the tax code, section 679.

Unlike a domestic trust, all assets transferred to a foreign trust are allowed “grantor trust” status (with one tax planning exception explained below).  They are also excluded from the taxable estate of the settlor.

As a “grantor trust,” the tax law allows the transfers of assets to the trust to be income tax-free.  Thus, you can do what you want to protect your assets and reduce estate taxes without worrying about income taxation.  

Foreign trust tax planning and asset protection is important for the small business owner.

This IRS blueprint on foreign trust tax planning is the explained in this episode of my radio show, Tax Talk below.

The play time is about 22 minutes. If you would like to see how a foreign trust fits into your business, then contact me, Brian Dooley, CPA,MBT at [email protected].

you want to defer income taxes, then fund the foreign trust with a loan due within five years.  

Such a loan is called a “qualified obligation.”  This makes the trust a tax deferral vehicle. The tax deferral can last for more than a century.  This type of a trust is named “non-grantor foreign trust.” 

The IRS Form 3520-A (filed by the trustee) details the tax planning structure for a tax-deferred foreign trust.  You will want to use the “qualified obligation” found on page 3 of the Form 3520 (filed by the settlor).   Learn more about this form on this link.

If you would like to discuss your questions about a foreign offshore trust, then send me, Brian Dooley, CPA an email at [email protected] or get my book (on this link) to learn how Nat King Cole designed his foreign trust (and beat the IRS in the Tax Court).

President John Kennedy – Our Obligation to Avoid Taxes and to Use Our Talents for the Benefit of Society

Just a short blog post that I hope we provide what I call “staple news”.   The chaos not only between the two parties but in the two parties can cause us to forget the tried and true course.   I picked President John F. Kennedy because he is the darling of the Democrats and those that call themselves liberals.

small business tax planning,

President John Kennedy (Democratic) is the most important president of last century. The President and Supreme Court Justice Holmes agreed… it is your duty to pay the least amount of taxes.

Yet, many of those same people have hatred towards independent voters that support the dreams and economic policies of this great President.

The photograph on the left says it all. While a government job is better than no job, it requires the Government to take (also known as steal) money from a non-government worker. A government job does not create a car, food or exports. The ideal job for a country is one that makes the country wealthier.

If you have a small business, this link has five sophisticated tax plans that your CPA may not have explained to you.  They are used the wealthy and the rich to avoid taxes so that they can create more jobs.

And there is more. Those the have the advantage of a higher education have an obligation to protect the Country by helping the population become educated. I have heard complaints about those that voted for President Trump. If you do feel that way, then please listen to JFK in this video below.

Avoiding Taxes Requires Watching the Politics of a Nation with a Huge National Debt

Successful tax planning looks for trends.  Tax planners look down the road and around the bends.  They structure now for tomorrow.   They don’t rely on year-end tax planning.

A recent article (in France) jumped out at me as I read about the American Republican Parties pretending to “reform” taxes.   France government subsidies and immigration are worst than the U.S. (thankfully).  However as the U.S. National debt combine with many states and cities facing insolvency, the battle between the have nots and the have is  looming.   New York has proposed a new tax that applies only to the haves.

Keep in mind, as you read this article, former President Obama, at an Orange County rally, told the audience those with household incomes exceeding $250,000 were the “rich”.   The $250,000 threshold continues to be the red line in the United States.   

You think it can not happen in America?  Since Democrat  Jerry Brown became governor, income taxes have increased by 30%.  The U.S, has had a tax rate up to 94%.  Add to that your state income taxes, I hope you can see that you must plan now for the future. 

Keep this in mind as you read this article.  

For your small business tax planning, you should watch the trends… which is higher taxes unless you are active in tax planning.   Great tax planning is not year end tax planning.  It is long term with a separate plan for each part of your business. 

I had the article translated  and it is below . 

Economic inadequacy or social justice? For thirty-six years, “the tax on the rich” made controversy. Emmanuel Macron wants to reform it, distinguishing between real estate and financial investments.

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